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View Full Version : Should i lowball a little?


jklawncare
03-25-2010, 04:11 PM
hey guys whats up

so im 16 my partner is still 15
theres one company..my neighbor actually.. who is very big in this area..hes actually the biggest..then theres the little companies that go unnoticed with there tiny little car door magnets..
but
since of my age i was thinking maybe we should low ball a little bit

not enough to put us out of business and in debt but enough to get an edge on the competition

our business cards and flyers advertise no heavy machinery, custom packages, free estimates, pay your way, and no contracts

No heavy machinery because were still saving for it and that might interest some people that are worred about it damaging the lawn. and no contracts cause..well were not legally allowed to sign them ahaaha

along with all of our services

i have some pretty nice business cards..ill show you them in a thumbnail
so hopefully that will draw some attention along with the flyers were handing out

but when we show up at the door they will probably be expecting men not teens..

any thoughts?

jklawncare
03-25-2010, 04:16 PM
Heres the business cards if you were interested..

CHEESE2009
03-25-2010, 04:31 PM
Your cards look fantastic!

As for lowballing, it all comes down to your survival. You have to do what you have to do.

It's an interesting topic that can be two sided.

Low-balling is bad, but sometimes it's efficient & worth doing because it doesn't effect you.

It could have negative effects on the market however. One of your other competitors may low-ball you after figuring out what you charge, which then your customers will always expect an even lower price.

So sure, low-ball a little & try to retain loyal customers, then raise your price a few bucks every year.

If you keep your prices low, the market just gets tougher.

It all comes down to quality customers vs the quantity of customers. Right now however, I suggest working on quantity in order to get quality.

jklawncare
03-25-2010, 04:47 PM
thanks breeze..well..cheese haah

and my whole plan was to low ball a 2-5 bucks a lawn for this year..
next year ill keep the prices to the customers that i have already but the others ill bump the prices..depending how things go i might bump it up on preexisting customers but i wanna try to avoid that need. And the company im competing against really wont have a problem with me lowballing..they cover almost all of porter county and have a long list of clients. if they do decide to knock there prices down ill contact them and sign an agreement against targeting the other companies clients and to keep our prices normal..

the lowballing would be temporary just for half the season..once we start advertising again mid-season we will go back to normal pricing

ritchiem
03-25-2010, 06:27 PM
Good answer Scott.

And JK I wouldn't call it lowballing, let's say you are being competitive.

CHEESE2009
03-25-2010, 07:06 PM
thanks breeze..well..cheese haah


It's all about the cheeeese man! LOL

Steve
03-25-2010, 08:17 PM
When you say should you low ball, are you making sure you still make a profit?

jklawncare
03-25-2010, 08:19 PM
haha that is a better way to put it ritchie and steve im not lowballing or "being competitive" to the point where i go broke..just enough to get an edge up.

JP Landscaping
03-25-2010, 10:31 PM
My take on lowballing is:

You are charging less than the competition and hurting your desired profits.

If you are charging less than the competition and keeping your profits where you would like, then it's not low balling. you are charging what you need to charge to make what you want to make. This is competitive pricing.

Maybe your costs are less than the competition's. Maybe you are alright netting $25,000-$30,000 for the season as apposed to your competition's $40,000-$50,000.

In your situation, I think all this applies. You don't have the big machines. I take it you don't pay rent or bills since you live with your parents. So in other words, you would be able to charge less than the competition because YOU CAN. I would not consider this low balling.

You have good plans to increase your prices. you can do this as you need to. for example, if you buy a bigger mower or other of your expenses increase then you can increase your prices.

good luck

ps... You don't have a phone number on your business card. Might be a good idea to get a cell and put your number on it.

njwsl.l.c@gmail.com
03-25-2010, 10:58 PM
I just started my business this year too. The business cards are great but you have no address, phone number, do you have insurance if not its cause your 16. I'm 19 and its hard for me too with getting loans but I'm insured too. But best of luck to you and I'm competitive prices too.

racerdude711
03-25-2010, 11:26 PM
jklawncare-

HECK YES!!! I brought up this point a few weeks back. I'm 17, so in the same situation as you.

I definitely price lower. Its almost stupid for me not to. We don't have the same expenses in the everyday world as all the older guys. No house payment, rent, kids, bills, ect. So, we can price lower, and essentially, we are walking away with the same profit.

My theory is to "be competitive" as you guys are calling it now, (formerly "low balling") and get as many customers as possible on your good side. Two or three years later, go ahead and raise the price a couple of bucks, and I'm sure the customer will have no problem with it because they'll no your quality of work, and they will realize they have been getting a deal. I had pretty low bids last summer. It was my first big summer for mowing, so I went out with low bids, got a decent amount of customers. If my prices were $5 higher, chances are, I may not have gotten them all.

Also, the age factor plays a role is us getting customers. Teenagers seem to carry a bad stereotype. Lets face the facts. Some people have the impression that we're out there to make a little extra cash to spend on the weekend, and that we won't be reliable, or do a good job. This may be the case for some kids, but I know you and I operate a whole different way.

SuperiorPower
03-25-2010, 11:47 PM
There is a point in time where you need to be competitive. There is also a point in time where you are cutting your own throat. For those folks who want to undercut everyone else (no pun intended!), I tend to think about a quote my brother told me about. He found it in a trade magazine for leather work. Here is the quote:

We have no quarrel with our competitors prices. They know what their product is worth!

With that being said, it sounds like you have decent grip on the difference between being competitive and cutting your own throat.

CHEESE2009
03-25-2010, 11:52 PM
http://i100.photobucket.com/albums/m25/mad_insane/iseeyou.gif

I like that quote!

racerdude711
03-25-2010, 11:53 PM
Well i'm not "cutting my throat". If we were to compare our net profit on 1 lawn, it's probably very close to the same thing. Your expenses are more than mine, therefore, you charge more. My expenses are less, so I charge less. I'm glad you can see where I'm coming from on all this. :)

SuperiorPower
03-26-2010, 02:38 AM
My theory is to "be competitive" as you guys are calling it now, (formerly "low balling")

Oh trust me, low balling is still alive and well. Its just that we have to be competitive at times. Consider this, if I had ZERO competition I could charge $75 for a tune up on a push mower but because there is competition, I can't. If I charged this much I would have no business.

In your shoes, if you had no competition you could likely charge $100 for a yard that you now charge a mere $30 for. That is what competition does.

Here is what a lowballer does:

The lowballer guesses at what the overhead is, and just takes a stab at the prices, hoping to underbid everyone else and hoping the the potential customer will then ask for your services because of the price point. They kill themselves in more than one way. To start out with, their overhead may be $10 per hour but they don't look at that. They think it is only $2-3 so they charge $15 per hour. Now they are making less than minimum wage.

Personally, I am NOT after the price point shopper. I sell quality. I give you the best value. For anything less, call my competitors.

As far as being able to charge less because of your overhead, here is my perspective on that. If I know my overhead is $10 per hour, I may be able to charge $25 and get away with it while my competitor is charging $35 to just get the same profit as me. My idea is, charge at least $30-32. This way you are getting that additional profit that you can now invest in your business. If you do 10 yards per week and charge an extra $5 per yard, that is $200 per month to invest in your business. I am not in business to give away my services, but rather to make money and grow my business. I believe just about everyone else is in the same shoes but some are just not willing to admit it. We tend to think that "profit" is a dirty word. Its not. Everyone makes a profit otherwise, why would we be in business? But then again, this is just my perspective.

picframer
03-26-2010, 06:17 AM
I think to some extent my own company could be seen as low on certain jobs, the simple reason is I have gear that can do it faster, I have little overhead and the staff are well trained.

I see this in wood chipping, we are a lot bigger than the small guys and have equipment that does an amazing job that they can not rent, they can rent smaller gear at $240.00 a day but what takes them three days we do in one. They could buy the chippers we use however they are $21,000+ each, the Deere dealer said only big companies or towns/cities buy this grade due to cost, they went on to say the little companies simply can't afford the overhead.

On the Landscaping side we have CUTS (Compact Utility Tractors) that will do a lot more than a skid steer, faster with better results yet we are the only landscaping company I have seen with them and according to the dealer we are the only one, my competition simply doesn't know what they can do.

On excavation we have three excavators in various sizes, we can do the stuff the little companies can't and we have gear that gets into spots the big buys can't, and the really big excavation guys are not interested in jobs under $10,000 from what we have seen and been told so most of our jobs are $2,500 to $8,000, this is excellent as we can barely keep up with this range.

On spraying Organics we simply have no competition so our return is very high.

Lawn mowing, we are higher than most however I have a target market and it's the upper end and specifically the rich areas with private communities, we are landing these based on presentation, our knowledge and our equipment, this is based on customer feedback.

So in short if you are making a 30%+ bottom line profit, adjust your prices accordingly, no one wins in a price war and big companies can crush a small company if they get you in their radar, this was a concern for me last year, I no longer have to worry about it for at least this year as we have lot's of signed orders.

racerdude711
03-26-2010, 11:07 AM
How does using a "Compact Utility Tractor" work better than the skid steer? I've never heard anyone bringing up this topic before.

jklawncare
03-26-2010, 01:39 PM
on the card i didnt put the address because its my home address and i dont see a need for one on there..unless any of you can convince me to

and i honestly forgot to put my number on there..right after i took them out of the printer i saw that and was pissed off ahahaha
so the next batch will have it on there..

picframer
03-26-2010, 05:01 PM
How does using a "Compact Utility Tractor" work better than the skid steer? I've never heard anyone bringing up this topic before.

And that my friend is the point, people in our business haven't researched what will give the biggest bang for the buc and clients want effienency.

MountainViewGreenskeeper
03-26-2010, 09:49 PM
You cant go into the sales pitch wanting every sale but you also need to be competitive. I was gunna charge 60$ a week for a job today on an estimate but I knew it was gunna cost me 65$ a week. So I stuck to my guns and went with the 65$ sure enough that what the "other" guy was charging but I sold her on both myself on the quality of work I do.

If you raise the price down the road as racerdude points out ya they know how hard you work but thay may also think that they can find someone again at that price cause you lowballed.

I have to agree with superiorpower if your over head is that cheap great charge $30 instead of the 35$ your competitor does your still cheaper. Besides your overhead may change one day: fuel, etc.

I understand your a kid just doing the neighborhood tryn to expand a little I did the same thing at your age with both my landscape and christmas light installation/take down. Its tough but I charged way to little in some situations
and my parents where the ones that took care of the equipment so how does that work........

Anyways Ive never heard that quote before but its fitting
"We have no quarrel with our competitors prices. They know what their product is worth!"
Ask yourself that question.... How much are you and your product worth?



Both now and in the near future

MountainViewGreenskeeper
03-26-2010, 09:50 PM
kinda miss worded that you cant go into every sale expecting to get the sale..... anyways......

MountainViewGreenskeeper
03-26-2010, 09:53 PM
Sorry more from my idiot brain that cnt piece together a coherent sentence.

I was told from a plumber friend who owns his business with his brothers. "You dont want to be the cheapest but you also dont want to be the most expensive. If your right imbetween your probably doing just fine."

racerdude711
03-27-2010, 02:12 PM
Picframer-

Again I ask. Why is the Compact Utility Tractor better than the skidsteer. It seems to me that the skidsteer would offer more power than the equally priced CUT. Also, the skidsteer is not as big, and can get jobs done faster due to its fast maneuverability.

picframer
03-27-2010, 05:14 PM
Picframer-

Again I ask. Why is the Compact Utility Tractor better than the skidsteer. It seems to me that the skidsteer would offer more power than the equally priced CUT. Also, the skidsteer is not as big, and can get jobs done faster due to its fast maneuverability.

A CUT is just as fast, a skid steer is far to heavy for septic fields and almost all of our clients have septic fields, a CUT can run every attachment a skid steer can but a skid steer can't run all the attachments we run, a skid steer is desperate rough and very loud inside, I base this on doing demo's for Deer and have close to 300 hours seat time, I also had a Bobcat all wheel steer skid steer dropped at a job site, it in my experience didn't do near as well as our CUT's. The operating weight of the Bobcat A300 is 8,800 pounds, I know they damage septic systems as we fixed 8 last year and have 9 on the books for this year to be fixed. They are so heavy that unless they have tracks, I found them getting stuck, although you can get it out using the loader, it's quite a mess.

I also tried a CAT 272C, but at 3,250 pounds it too is too heavy.

I tried a MT55 track loader and found it tore the lawns up worse than an excavator.

I had an attachment made for the loaders of the CUTS we have, it accepts every skid steer attachment, we use rock rakes a lot.

Another thing is operating costs, a CUT is about 1/8th of the operating cost.

MountainViewGreenskeeper
03-27-2010, 06:04 PM
lol I just re read what I wrote yesterday..... dont listen to me that was a long day............

jasonw
03-28-2010, 08:36 PM
You cant go into the sales pitch wanting every sale but you also need to be competitive. I was gunna charge 60$ a week for a job today on an estimate but I knew it was gunna cost me 65$ a week. So I stuck to my guns and went with the 65$ sure enough that what the "other" guy was charging but I sold her on both myself on the quality of work I do.

If you raise the price down the road as racerdude points out ya they know how hard you work but thay may also think that they can find someone again at that price cause you lowballed.

I have to agree with superiorpower if your over head is that cheap great charge $30 instead of the 35$ your competitor does your still cheaper. Besides your overhead may change one day: fuel, etc.

I understand your a kid just doing the neighborhood tryn to expand a little I did the same thing at your age with both my landscape and christmas light installation/take down. Its tough but I charged way to little in some situations
and my parents where the ones that took care of the equipment so how does that work........

Anyways Ive never heard that quote before but its fitting
"We have no quarrel with our competitors prices. They know what their product is worth!"
Ask yourself that question.... How much are you and your product worth?



Both now and in the near future

But why would you even consider doing a $65 per week job that will cost you that to do? After time and labor are talyd in you are losing money. Did I miss something?

jasonw
03-28-2010, 09:16 PM
lol I just re read what I wrote yesterday..... dont listen to me that was a long day............

I should not have ask the last question then lol. The way I see it if you undercut another company yet still make a profit that's called business and competition. Just keep an eye on your numbers and make sure you are always making money.

MountainViewGreenskeeper
03-29-2010, 12:27 AM
well 60$ i still would have been maken money but since Im just starting out I always think Im charging to much sometimes with my bigger clients. Im too used to my cheap ^%$ doing everything myself so I dont have to pay someone to do it. 65$ just makes it a little nicer to go out and do it and extra $20 a month goes a long ways towards a bottom line.

jasonw
03-29-2010, 10:04 AM
I was gunna charge 60$ a week for a job today on an estimate but I knew it was gunna cost me 65$ a week. So I stuck to my guns and went with the 65$ sure enough that what the "other" guy was charging but I sold her on both myself on the quality of work I do.

Realy? Did I misunderstand the above then because it sounded like you said you were going to charge 60 per week for a job you knew would cost 65 so you stuck with 65. Seems like a wast of time to me, well unless of course lawn care is a hobby then at least you are breaking even.

jasonw
03-29-2010, 10:05 AM
Realy? Did I misunderstand the above then because it sounded like you said you were going to charge 60 per week for a job you knew would cost 65 so you stuck with 65. Seems like a wast of time to me, well unless of course lawn care is a hobby then at least you are breaking even.

Oh my, Steve when did I get the "Senior Member" title? I feel important now.

Steve
03-29-2010, 08:46 PM
Oh my, Steve when did I get the "Senior Member" title? I feel important now.

That's because you are very important :D

jasonw
03-30-2010, 02:47 AM
That's because you are very important :D

AWESOME. I knew I wasn't just some lawn care loser that spends to much time online. WOO HOO Get er done.

bruces
04-08-2010, 02:10 PM
I would like to add to the whole low-ball thing .I do understand your position ,and have been in the same position a few times [I have owned 5 businesses now ] but there is one main problem with being the low-baller .Once you have a customer established ,it becomes very very hard to get more cash from them to do the same job .You would be far ahead to offer a special "first month deal" or "first cuts free " or "every cut gets your name in our monthly draw for a free cut " but you must state your "usual" price right off the bat or you will have issues raising your rates when the time comes .The argument that your young with little overhead should not be concidered as you will find your overhead will increase as you purchase better,faster equipment .My son started cutting lawns when he was 10 years old because he wanted to buy a guitar ,he had 21 customers after the first two weeks ,average lawn took 3/4 hour ,and he charged $25.00 per lawn seven years ago .

CHEESE2009
04-08-2010, 03:02 PM
Here is a solution.


Lets say you build a business & it's working for you as it is.

You need more equipment, better equipment. Your overhead is going to rise.

Keep your current customers the same price, don't even bother losing them by increasing their bill.

The plan is to now build up in a different part of town, where you will be able to raise your prices without conflict. "How come HE is paying less than me?" You don't want that.

So as you take on new, more expensive customers then you can afford your new overhead costs.

When you are just starting your business;

I say raise your price after you receive 25 committed customers. The other 25/50 customers will allow you to afford your new equipment & slightly take care of your overhead, especially if you are getting money back from the government every year :p

Here is just an example of a tactic, that some customers will be able to understand;

http://i100.photobucket.com/albums/m25/mad_insane/strat.jpg

Basically, you can adjust your "zones" the way you see fit.

swstout
04-08-2010, 03:15 PM
I remember a TV add a few months ago where a barber was almost put out of business when a national barber chain opened next to him offering $6.00 haircuts. After a few months he put a banner above his shop that read “We Fix $6.00 Haircuts”!

Food for thought!

Steve

CHEESE2009
04-08-2010, 04:01 PM
I remember a TV add a few months ago where a barber was almost put out of business when a national barber chain opened next to him offering $6.00 haircuts. After a few months he put a banner above his shop that read “We Fix $6.00 Haircuts”!

Food for thought!

Steve


WOW, hahaha!!! That is hilarious & so genius!!!!

I gotta remember that one!!!

Steve
04-09-2010, 06:05 AM
Basically, you can adjust your "zones" the way you see fit.

Scott, what do the numbers in the circles on your map signify?

CHEESE2009
04-09-2010, 06:16 AM
Scott, what do the numbers in the circles on your map signify?

Price ranges, though they must be adjusted according to your business.

My "zones map" looks quite different.

I usually box in perimeters & go into extreme detail on how certain areas are priced. I have "hot zones" which my price cannot be beat, & areas I basically own. Red zones are those which I can be beat & should focus on growing. Etc.

Everyone (my competition) is STILL lowering their prices. Gas is also supposed to go up to $2/ltr one source tells me. So it's getting pretty rough.

Everyone is basically charging the same now, all the big guys charge my price, all the small guys charge my price... It's totally warped.

Though I have an "insider" who is going to provide me with certain information, to find out who is "after me, & why".

This person is also going to ambush my town with snow removal services, which I will refer to my lawn clients. This person does not do lawn maintenance & has no need. I will be completely secure for next year.